Oak Park resident Jamal Khoury, who was defrauded out of $2.34 million by now-disbarred attorney Kathleen Niew, has himself been indicted on federal fraud charges.
In the November 2014 indictment, prosecutors charged Khoury with systematically defrauding the U.S. Department of Agriculture's Supplemental Nutrition Assistance Program (SNAP), of "at least approximately $2,500,000" through a scheme involving illegal cash transactions through the LINK card program.
The SNAP/LINK program is designed to allow low-income program participants to purchase approved food and personal items. Among the numerous prohibited purchases are alcohol, tobacco, and pet foods. Stores are also expressly prohibited from accepting Link Card benefits in exchange for cash.
Prosecutors allege that, beginning "no later than" January 2010, and continuing to about June 2012, Khoury "knowingly devised and participated in a scheme to defraud and to obtain money and property from the USDA by means of materially false and fraudulent pretenses. …"
Khoury allegedly reaped a hefty percentage of approximately 33 percent from numerous illegal transactions over the years. In one case, he pocketed $53 of an ineligible $153 transaction. In another case he kept $79.20 from an illegal cash transaction totaling $229.20.
Ironically, it was Khoury's complaint to federal authorities about Niew's fraud that led to Khoury's own alleged fraud being uncovered. In a defense sentencing memo on Niew's behalf filed in court Feb. 2, her attorney states, "[Jamal Khoury] operated a grocery store named Super Jim's, where he accepted LINK benefits in exchange for groceries. From this investigation, the government learned that [Jamal Khoury] often provided cash to individuals in exchange for the LINK benefits, and charged a fee for this service."
Federal prosecutors say Khoury is liable for the USDA's estimated $2,500,000 in losses allegedly through the fraud. He also faces forfeiture of a Pompano Beach, Florida condominium and his 1,900-square-foot Oak Park condo on the 200 block of South Boulevard.
In early November Magistrate Judge Sheila M. Finnegan released Khoury on his own recognizance under $50,000 bond.
On Nov. 17, the government asked for and received a protective order on all investigative materials produced for trials, stating, "The discovery to be provided by the government in this case includes sensitive information, whose unrestricted dissemination could adversely affect law enforcement interests and the privacy interests of third parties."
Khoury's criminal indictment is just his latest setback.
Two years ago another federal judge found him liable for violating the federal Fair Labor Standards Act, or FLSA.
In 2010 several former employees of Khoury's Super Jim's grocery store in North Austin filed a lawsuit accusing him of violating the FLSA by not paying them overtime for hours worked past 40 hours a week.
"The court found the plaintiffs to be credible witnesses. The court did not find the defendant to be a credible witness," Judge Robert W. Gettleman wrote in awarding payments totaling $188,756.
Khoury's former employees, Gettlemen ruled, "have produced evidence to support the inference that they generally worked from opening to closing, seven days a week, and defendants have failed to negate the reasonableness of the inference."
Editor's Note: This story has been updated to include additional information on how federal investigators discovered Jamal Khoury's alleged LINK fraud.
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